Business Page – May 27th,
2001

Did Business Page Say That?

Introduction

Mr.
Ravi Dev, MP and Leader of ROAR in yesterday’s Stabroek News took
exception to Business Page of last Sunday titled: Prioritising poverty
reduction national imperative.I
welcome Mr. Dev’s criticisms as well as his kind comments on the
column.Most of all I am
thankful to him for providing me with a topic for today’s article when
there is so little taking place in business and the economy that one can
write about.The principal
criticism Mr. Dev makes is that I implied (emphasis mine) “that the
government must solve the problem of poverty through job creation’,
that I endorsed President Jagdeo’s “socialist proclivities” and
that I “seek to have the government generate temporary relief at the
expense of the long term future of the nation”.

I
do not question the sincerity of these criticisms and am prepared to
accept them while offering some kind of explanation and clarification of
the article.First of all,
let me say that a friend sent me a copy of the Interim Poverty Reduction
Strategy Paper and asked whether I would address the matter in Business
Page.The focus therefore
was on the Paper, which I understand is currently being discussed by
civil society, and not on the wider issue of job creation.I did not think it would have been helpful for me to dismiss the
Paper and say that the government should concentrate on policies only
while leaving to the private sector the sole responsibility for
providing jobs.I also
linked to the Paper the ongoing talks between President Jagdeo and Mr.
Hoyte which has as a focus the provision for jobs for the army of
unemployed among all ethnic groups and across all regions of the
country.

Sustainable
jobs and socialist proclivities

I
have naturally re-read the article to identify exactly what was written
that could imply that the government must the problem of poverty through
job creation.I argued that
the solution to the poverty lies in sustainable job creation and the
firing up of the entrepreneurial spirit.I said that it was a pity that the committee looking at the needs
of depressed communities did not have in its mandate “options for
job-creation and profit centered-activities.”Clearly, or so I thought, I could not be speaking of jobs
provided by the government only.In the context of the dialogue, the article noted that the
challenge of creating jobs is the responsibility of not only the
government but the main opposition party as well.In the concluding paragraph, the article suggested that the
ministries should be scrapped, the PNC-R should help to promote at least
half of the hundred of thousand jobs promised in its elections
manifesto, and that the country needs “a ministry that takes
unemployment seriously and that can call on the other ministers to
create policies and programmes that create and sustain jobs.”

I
find it a little difficult to under what is socialist about a call for
job creation in the wider context of the article.

There
is a distinction between job creation and policies and nowhere did the
article say that it is the sole responsibility of the government to
provide the badly needed jobs.If this impression was conveyed then I must apologise and
state clearly that I do not believe that this would be either sensible
or possible.

President
Jagdeo and Keynes

The
final point of criticism on Business Page in Mr. Dev’s letter is that
unfortunately, both Mr. Jagdeo and I “seek to have the government
generate temporary relief at the expense of the long term future of the
nation”.I have no
authority to speak on President’s Jagdeo’s behalf but again have to
confess to some difficulty in understanding how Mr. Dev could have
arrived at this conclusion.While
we would like to see all the country’s problems solved immediately,
that is clearly impossible and it is necessary to set them out, analyse
and prioritise them and move immediately to addressing solutions.That does not amount in my view to addressing one at the expense
of the other.Indeed at the
risk of over-repetition, the article referred on more that one occasion
to sustainable job creation.

I
seem to recall that a few weeks ago, in a letter in this newspaper, Mr.
Dev quoted from economist John Maynard Keynes’ famous statement in
“A Tract on Monetary Reform”: In the long run, we all dead.’Mr. Keynes is better known for his pioneering work, which has
influenced not only an entire school of economic thought but government
action as well.Before
Keynes, classical economists had argued that in the market economy the
economic system would spontaneously tend to produce full employment of
resources, through the invisible hand of the market.

Fiscal
versus monetary policies

In
the General Theory of Employment, Interest and Money published in 1936,
Mr. Keynes recommended a more interventionist policy by the government
and placed emphasis on fiscal policy.There is no doubt that Keynes was the most influential
contributor to economic thought in the twentieth century although his is
certainly not the last word.As the structure of economies and economic activities change
so too will theory.Most
noticeably since President Reagan and Prime Minister Thatcher, there has
been a shift of monetary policies whereby the attainment of government
objectives are pursued through adjustment to the levels of money supply
and interest rates.In the
final analysis, both sets of theory still have their relevance depending
on the prevailing circumstances and the nature of the economy.

In
the case, they are not mutually exclusive though at any given time one
may be more pronounced than the other.As we discuss policies there will always be a lag between the
adoption of the policies and their desired impact.The issue facing this country is how to deal with the problem of
unemployment in the interim while the policy measures take time to show
results.

The
unemployed person cannot await the effective operation of fiscal and
monetary policies or the kind of appraisal, which promoters of
investment projects necessarily undertake prior to their investment.

The
ERP (European Recovery Programme)

The
Economies of all countries in the world in the twentieth century post
– World War 2 Europe, Japan, South Korea and more recently, the former
socialist countries – did not begin their recovery by the application
of classical theories of economics but with specific programmes to
enable them to reach a stage where market concepts would work.Perhaps the most famous of these efforts is the Marshall Plan or
the European Recovery Programme, the USA-sponsored programme designed to
rehabilitate the economies of post-World War 2 western and southern
European nations in order to create state conditions in which democratic
institution would survive. To say that government intervention will
corrupt the market pre-supposes that government intervention is
necessarily bad and that there is a functioning market in Guyana.Many people would be surprised to learn the extent to which many
of those in the private sector are guilty of not only corrupting the
market but the country as well.

We
simply cannot ignore the importance of government in the task of both
creating the environment for, as well as providing directly, some of the
tens of thousands of jobs needed to make the unemployed consider that
they have a stake in the society.

Significance
of Governments

There
is another point that is often missed by those who talk about the
private sector being the engine of growth.Even in the most fanatically market-oriented economy, the
government is a significant employer and consumer of other resources.

If
a country is to provide security for its citizens and visitors, police
its borders, protect the environment, regulate the extractive
industries, collect taxes monitor compliance with labour and social
legislation among others it will need committed, trained, motivated and
well paid staff.

Even
if we believe that some of these functions can be outsourced it is still
the government that is the creator of these jobs. As a major consumer of
resources, it has the potential, working in corporation with the private
sector, to create opportunities for business and jobs.

We
recall not too long ago, that there were attempts by the forces within
the private sector to import stone form Canada. This is perhaps the
Guyanese equivalent of taking coals to Newcastle.And only this week we read of the contract being awarded to some
foreign entity to consolidate the laws of Guyana.Surely here was another opportunity to afford meaningful
employment for the legal/information technology sector in Guyana.Ram & McRae has consolidated all the tax and several of the
legislation of Guyana. Indeed it has donated a number of these to the
administering government departments. But now that a lucrative contract
is available, who gets it?There
are jobs involved and importantly, the income will be taxable at high
rates and money put into the system.

Conclusion

Mr.
Dev has raised several other issues particularly relating to the private
sector.Without any doubt
they have a lead role to play in job creation. But they have other
functions and duties as well.Should
they be consuming non-renewable resources and pay no taxes?Should some of them benefit form concessions not available to
competitors.

Where
is the justification for one cell phone venture to get a five-year tax
holiday while its competitors gets none?This reminds me of my inability to explain to my three year old
Christelle why one piggy got roast beef while the other got none. And
just incidentally, since when does the Chief Executive Officer of Go
Invest have the authority to grant tax holidays?

Once
again thanks to Mr. Dev for creating the opportunity for me to clarify
Business Page’s position on poverty. I offer my congratulations to him
on his election to the National Assembly and look forward to him making
a valuable contribution to a genuine debate – without any attempt at
political point scoring – on the ideological, political, social and
economic policies we should be pursuing.